SANTA CRUZ — Santa Cruz County is on track to stave off cuts and weather the storm of the statewide pension crisis in coming years — so long as the economy doesn’t sink into another recession.

During a budget forecast Tuesday, county officials painted a rosier picture of the local government’s finances than a year earlier, when rising employee costs threatened to blow sizable holes in the local government’s budget.

The difference? Mostly Measure G, the half-cent sales tax increase approved by county voters on Nov. 6 that is expected to raise an additional $5.6 million annually for 12 years.

Thanks to Measure G funds, county officials say they are set to balance the books next year and cut projected deficits through 2025 from $7 million to $9 million per year to a more manageable $1 million to $3 million.

Projected deficits now represent less than half a percent of the county’s $821 million budget — and are “very manageable” under current economic conditions, according to Christina Mowrey, the county’s budget manager.

“Our revenue growth will slow and our expenditure growth will continue, but it is better than we originally anticipated,” Mowrey told the Board of Supervisors on Tuesday.

The county will still likely need to consider new revenue measures to fill in the remaining gaps. Among ideas floated: raising the transient occupancy tax levied on hotel and vacation rentals, raising the Parks and Recreation tax or creating an annual Business License Tax.

But Mowrey cautioned the budget forecast likely represents a “best-case scenario.” She said if a recession hits in coming years, as some economists fear, deficits could drastically swell.

The budget “really depends on there not being a recession in the next five years,” Palacios told county supervisors Tuesday. “That’s probably a key thing we’re going to have to be watching and taking a look at.”

Soaring pension costs are driven by a lack of funding in CalPERs, the state public-employee retirement system, which faces an unfunded liability of $168 billion after the fund’s earnings tanked in the 2008 recession.

Local governments are on the hook to make up much of the difference, with average pension costs expected to nearly double by 2025 across the state. Santa Cruz County’s own pension costs are projected to increase from $42 million to $83 million in the same period.

But Santa Cruz County’s finances are in a better position than many other local governments facing the same ballooning pension payments, according to Palacios.

“The good news is that we are in the worst part of the PERS increases right now and we’re being able to manage it,” Palacios said, crediting local and statewide pension reforms, the effects of which are beginning to be felt.

“That’s our hope — that as long as the economy doesn’t enter recession we should be able to manage our way through this PERS crisis in a way that other cities and other counties may not be able to do.”

Nicholas Ibarra covers government, education, cannabis and agriculture for the Sentinel. Raised in the Santa Cruz Mountains, Nicholas has earned multiple statewide awards for his writing, which has appeared throughout numerous Bay Area newspapers including the Mercury News and East Bay Times. He has also contributed reporting to publications including KQED Radio, Scientific American and Sierra Magazine. Nicholas earned a B.S. in journalism from San Jose State University.